AF 210

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EX1-Raw

Classify each of the activities above as either a unit-level, batch-level, product-level, or organization-sustaining activity.
a Receive raw materials from suppliers. On Own
b Manage parts inventories.
a Do rough milling work on products.
b Interview and process new employees in the personnel department.
a Design new products.
b Perform periodic preventive maintenance on general-use equipment.
a Use the general factory building.
b Issue purchase orders for a job.

EX2-Raw

The activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other.
Activity Measures are: Miles for Travel, Number of Pickups and Deliveries for Pickup and Delivery, and Number of Customers for Customer Service;
the Other cost pool has no Activity Measure because it is an Organization-sustaining Activity.
Complete the first-stage allocations of costs to activity cost pools as illustrated in Exhibit 5-6. On Own
Given: Costs and Distribution of Resource Consumption (across activity pools):
ACTIVITY COST POOLS
Costs Travel Pickup/Del Cust Service Other Totals Travel Pickup/Del Cust Service Other Totals
Driver and guard wages 720,000 50% 35% 10% 5% 100%
Vehicle operating expense 280,000 70% 5% 0% 25% 100%
Vehicle depreciation 120,000 60% 15% 0% 25% 100%
Cust rep salaries and expenses 160,000 0% 0% 90% 10% 100%
Office expenses 30,000 0% 20% 30% 50% 100%
Administrative expenses 320,000 0% 5% 60% 35% 100%
Total cost 1,630,000 Total:
~ Alternatively ~
(this is the disply arrangement in EX3)
Driver and guard wages Vehicle operating expense Vehicle depreciation Cust rep salaries and expenses Office expenses Administrative expenses Total
Travel
Pickup/Del
Cust Service
Other
Totals

EX3-Raw

Costs are driven by the Size of Lawns, the Size of Garden Beds, the Travel Distance, and the Number of Customers.
Additionally, maintaining Garden Beds is further categorized as Low Maintenance or High Maintenance beds (mainly flowers and exotic plants)
The company already has completed its first-stage allocations of costs and has summarized its annual costs and activity as follows:
Compute the activity rate for each of the activity cost pools.
On Own
Given: YEARLY PER UNIT
Activity Cost Pool Est OH Exp Activity Act Rate
Caring for lawn 72,000 150,000 square feet of lawn
Caring for garden beds–low maintenance 26,400 20,000 square feet of low maintenance beds
Caring for garden beds–high maintenance 41,400 15,000 square feet of high maintenance beds
Travel to jobs 3,250 12,500 miles
Customer billing and service 8,750 25 customers

EX4-Raw

See the following six activity cost pools and activity rates:
How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Given: EXP ACTIVITY per/unit TOT OVERHEAD On Own
K425 M67 Rates K425 M67
Direct labor-hours 80 500 6 direct labor-hours
Machine-hours 100 1,500 4 machine-hours
Machine setups 1 4 50 setups
Production orders 1 4 90 orders
Shipments 1 10 14 shipments
Product sustaining 1 1 840 products
Number of units produced per year 200 2,000

EX5-Raw

Re. the Standard and Custom models, the following activity cost pools and activity rates are provided:
Given: Activity Cost Pool Rate
Supporting direct labor 26 per direct labor-hour
Order processing 284 per order
Custom design processing 186 per custom design
Customer service 379 per customer
19.50 Direct Labor Rate/Hour
Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months:
Compute the Customer Margin.
Standard Custom Std Costs Std Rev Cust Costs Cust Rev
Number of gliders 20 3
Number of orders 1 3
Number of custom designs - 0 3
Direct labor-hours per glider 26 28
Direct Wages
Supp Dir Labor
Selling price per glider 1,850 2,400
Direct materials cost per glider 564 634
Individual Contributions:
Subtotal:
minus Cust Service:
Total Customer Margin:

EX6-Raw

Classify each of the activities above as either a unit-level, batch-level, product-level, customer-level, or organization-sustaining activity.
An order to duplicate a particular CD is a product-level activity.
Assume the order is large enough that it must be broken down into batches. On Own
Sales representatives’ periodic visits to customers.
Ordering labels from the printer for a particular CD.
Setting up the CD duplicating machine to make copies from a master CD.
Loading the automatic labeling machine with labels for a particular CD.
Visually inspecting CDs and placing them by hand into protective plastic cases.
Preparation of the shipping documents for the order.
Periodic maintenance of equipment.
Lighting and heating the company’s production facility.
Preparation of quarterly financial reports.

EX7-Raw

There is concern about the costs of handling routine transactions across branches. More specifically, to determine:
the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.
Prepare the first-stage allocation for the activity-based costing study. (See Exhibit 5–6 for an example of a first-stage allocation.)
Westfield branch of Security Home Bank cost data and est dist of labor across activities for last year: On Own

EX8-Raw

...EX7 CONTINUED
The following data concerning the transactions of the branch during the past year:
Using the first-stage allocation from Exercise 5–7 and the data below, compute the activity rates for the activity-based costing system. (Use Exhibit 5–7 as a guide.)
YEARLY (from EX7) PER UNIT
Given: Activity Westfield Tot Cost Act Rate On Own
Opening accounts 500 new accounts opened
Processing deposits and withdrawals 100,000 deposits and withdrawals processed
Processing other customer transactions 5,000 other customer transactions processed
The lowest costs reported by other branches for these activities are displayed below:
Activity Lowest Cost among All Security Home Bank Branches
Opening accounts 26.75 per new account
Processing deposits and withdrawals 1.24 per deposit or withdrawal
Processing other customer transactions 11.86 per other customer transaction
What do these results suggest to you concerning operations at the Westfield branch?

EX9-Raw

Four activity cost pools are listed below:
Determine the cost of a recent order (1 customer) which required 200 direct labor-hours, 4 hours of product testing, and 2 sales calls.
What is the total overhead cost assigned to the order for heavy-duty trailer axles?
On Own